09/18/2017

Vermont's "Use" Tax

Last night, I was watching the Los Angeles Dodgers versus Washington Nationals game in Major League Baseball concomitantly--and thus intermittently--with the Green Bay Packers versus Atlanta Falcons game in the National Football League. At the end of one inning, I switched from Dodgers-Nationals to Packers-Falcons. At the time I switched, it was Dodgers 1, Nationals 0. When I switched back after some very interesting Falcons defence, wham-o, bam-o! It was Dodgers 1, Nationals 3, soon to be Dodgers 1, Nationals 4. Washington won the game 7-1.

Sudden vast reversals of fortune in a baseball game are not standard-issue, although they most likely occur frequently enough that one cannot appropriately call them statistical oddities. What one can call them is a cautionary tale whose take-home point is "Never assume!"

This remained very much on my mind this morning as I listened to the morning crew over at TSN 690 talking about their picks for NFL football and NHL hockey. This is the stuff sports betting is made of. It is also limited information, based entirely on past performance, and information which cannot take into account all the unknown variables that will pop up on game/match day. This is why I avoid sports betting and gambling altogether. As extremely unpopular as the following will be with the financial media and economists, the only difference between gambling at a casino or on line on the one hand, and the stock markets on the other is the dress code.

At this point, some words on WVMT 690 itself are in order. If you listen exclusively to Jeff Holliday, Andy Warski, Vee, Kraut&Lies, Millennial Woes and sundry other YouTubes-dwelling denizens of the Republic of Ka-Ka-Stain for all your news and information needs, you could be forgiven for having the delusion that "the mainstream media" (save, of course, for Breitbarts) are a bunch of liars with a secret agenda to liberalise America and the rest of the West beyond all recognition. This is why you should not listen to the Republic of Ka-Ka-Stain for your news and information and turn instead to kosher sources such as The Economist, The Financial Times,The Harvard Business Review and Mountain Lake PBS and WVMT 690. For example, if your sole source of information for last year's elections was the CNN or the Breitbart's, you could be forgiven for thinking that it was a contest between two juveniles, each vying to outdo the other in bafoonery. If, on the other hand, you watched Mountain Lake PBS during last year's election season, you would have received an altogether different picture, namely the one of the video below.

Sane, calm and refreshingly different from the CNN and the Breitbart's, isn't it? The exact same thing can be said of WVMT 690. In the interests of disclosure, yes, WVMT 690 runs Fox News' Brian Kilmeade. WVMT 690alsogets its national news reporting from ABC, not exactly known to be a Stephen Bannon/Richard Spencer repeating station, something evinced by the topic Charlie, Ernie and Lisa were discussing with Mike Smith this morning, which is a topic too mundane, too pedestrian for the la-di-da, "My excrement is as odourless as vodka!" likes of Jeff Holliday, the Warskis, Vee, Kraut&Lies, Millennial Woes and the rest of the Republic of Ka-Ka-Stain.

That topic was the Vermont Department of Revenue sending out, on a wholesale basis, letters to Vermont citizens alleging that the recipients did not pay the "use" tax (a Vermont tariff on items bought anywhere outside of Vermont to be paid at the same time Vermont citizens pay their income taxes.) The "use" tax and the Vermont Department of Revenue's crackdown on the pretext thereof was detailed in a recent column by Mr. Smith, which was under discussion this morning.

At this point, I have to confess to no small measure of discomfort in addressing this issue. For one thing, unlike Québec--or, indeed, the whole of Canada--Vermont is a thoroughly modern, thoroughly civilised jurisdiction. Vermonters, unlike Canadians such as the Warskis, Lauren Southern, Jordan Peterson and Davis Aurini, speak Nice, Normal Person English without a trace of an accent. Second, although I was born, and have been back residing in recent decades, in Canada, I spent my formative decades in New York. New York is the centre of the universe. This is an established fact, an established fact which causes no end of resentment on the part of Vermonters and denizens of the other forty-eight states who view New Yorkers, and even us ex-New Yorkers, as imperialistic, high-handed, arrogant, loudmouthed know-it-alls. Vermonters and the denizens of the other forty-eight states are entirely accurate in this latter assessment. This, in most particular, makes me somewhat loathe to comment on anyinternal Vermont affairs, including the "use" tax.

As well, there is the fact that Mr. Smith is a Navy SEAL. He might not have worn tiger stripes in a number of years, and I do not know if he shoots to qualify (being able to hit a 3'' by 5'' index card with his revolver from any distance) every day as prescribed by Dick Marcinko. However, I do know, also from Dick Marcinko, that the average US Navy SEAL knows more about strategy than von Schlieffen and von Seeckt put together. Part of knowing strategy is knowing the terrain, most especially current conditions therein, extremely well. I have not been to Vermont in some years now, while Mr. Smith lives there. I do not, by any means, think that my purely external observations, and extrapolations, comprise anything remotely resembling the value of a SITREP from Mr. Smith.

The "use" tax, as I said, is a de facto Vermont tariff extracted from Vermont citizens at the time they pay their Vermont income taxes. Mr. Smith approves of the "use" tax as such, but objects to the slovenly manner in which the Vermont Department sprayed bursts of letters to Vermont citizens telling them, whether with merit or not, that they owed back "use" taxes. As I said, Mr. Smith knows the current situation on the ground in Vermont far better than I do. That being said, I have to say that Vermont's "use" tax goes entirely against the Federal System of free internal trade and tariffs on foreign products envisioned by, not only Alexander Hamilton, but also by General Washington, Henry Clay and Otto Graf von Bismarck. My fondness for the economic ideas of Hamilton, General Washington, Clay and Graf on Bismarck does not stem from me reading them, and then concluding "Hey! These sound like good ideas." Rather, this fondness of mine stems from the situation in Canada, which is exactly the opposite of that proposed by these great statesmen.

Admittedly, compared to the situations in Canada and Québec, Vermont's "use" tax is minimally obtrusive. This assumes the status quo is immutable. One of the central problems facing Vermont, a problem which bears directly on the "use tax," which was raised by Mr. Smith and Charlie, Ernie and Lisa this morning, is the fact that Vermont has very little population growth, which means fewer new Vermont tax payers are coming in. It is difficult for governments to grow the populations of their jurisdictions. The best they can hope for is to enact a policy that is designed to create or attract more taxpayers and see how it turns out.

Let me take the case wherein Vermont's taxpaying population does not grow and the "use tax" remains in situ. The "use tax" being, much like the VAT in Britain and the EU (and what the GST usedto be in Canada until recently, when Finance Minister Bill Morneau, in effort to pre-empt Trump in the NAFTA talks, removed that provision of the GST that allowed visitors to reclaim the monies consumed by the tax when they left), a tariff in all but name, its continued existence gives Vermont businesses a practical monopoly on the State. Monopolies have little incentive to innovate. People either buy from them or go without. Since monopolies are guaranteed the business of a population that has no choice but to buy from them, they acquire wealth more easily than they would in a free market economy. Wealth means political influence. In economic terms, it means exactly what Richard Burton's character says in The Klansman: "About forty men dominating the lives of sixteen thousand so-called 'free' people." Since these monopolies will be the State's largest taxpayers, and, undoubtedly, its largest campaign donors, they will, like New Brunswick's liquor cartel, dominate the government to the effect of being able to dictate the diversion of law enforcement resources to serve their private interests.